Waya, R v (Rev 1)

For confiscation under the Proceeds of Crime Act 2002, a person who procures a mortgage advance by deception obtains property if he acquires an equitable interest in the money transfer and can require its application towards the purchase. The transfer may then be traced into the property bought with it.

The benefit is the proportion of the current value of the substitute property which represents the tainted advance. It is not reduced because the original mortgage was repaid or replaced by an untainted loan. The statutory inquiry concerns the benefit obtained from criminal conduct, rather than the lender’s loss or the offender’s net profit.

The appellant bought a flat for £775,000. He contributed £310,000 of his own money and obtained a £465,000 mortgage after making false statements about his employment and earnings. The lender paid the advance through the appellant’s solicitor to the vendor. The first mortgage was later redeemed through a larger, untainted second mortgage.

Following his conviction for obtaining a money transfer by deception contrary to the Theft Act 1968, the Southwark Crown Court made a confiscation order for £1,540,000. It treated the whole value of the property at the time of confiscation, less the appellant’s original contribution, as criminal benefit.

On appeal, the central issue was whether the criminal benefit was the appellant’s interest in the land or the money transfer obtained by deception and represented in the land.

1. The appeal was allowed in part. The confiscation order was varied from £1,540,000 to £1,110,000.
2. The court rejected the appellant’s reliance on R v Preddy [1996] AC 815. That decision concerned the former offence under section 15 of the Theft Act 1968, which required proof that the defendant had obtained property belonging to another. The confiscation inquiry under section 76(4) of the Proceeds of Crime Act 2002 has no such requirement.
3. By sections 84(1) and 84(2), property includes intangible property and an equitable interest is sufficient. Once the conditions for the mortgage advance were satisfied, the appellant had at least an equitable interest in the transfer held in his solicitor’s account. He had a right to ensure that it was applied to complete the purchase. He therefore obtained property as a result of, or in connection with, his criminal conduct.
4. The advance was subsequently invested in the flat and was traceable into it under section 80. The repayment of the first mortgage and grant of the second mortgage did not break that representation. The relevant benefit was 60% of the property’s value at confiscation, reflecting the proportion of the purchase price funded by the tainted advance. It was not the net equity after allowing for mortgage debt. This was consistent with R v May [2008] AC 1028 and was supported by R v Mohammed Shabir [2008] EWCA Crim 1809.
5. The court did not need to decide whether the transfer also constituted a pecuniary advantage under section 76(5). Its terms nevertheless supported the conclusion that confiscation focuses on the realistic value of the benefit obtained.

• Court of Appeal (Criminal Division): Allowed the appeal in part and substituted a confiscation order of £1,110,000: [2010] EWCA Crim 412.
• Southwark Crown Court: Following the appellant’s conviction, made a confiscation order of £1,540,000 on 25 January 2008.